When your own house would be out of reach

Three out of five homeowners would not be able to afford their property if they had to buy it at the current valuation, Consumer NZ has revealed.

The figures were gathered through the organisation’s sentiment tracker, which tracks how New Zealanders feel about a range of issues.

About 58 per cent of respondents did not think they would be able to purchase their home at its current valuation, 9 per cent did not know, and 33 per cent said they could. For people who did not own property, the tracker found more than 40 per cent felt totally locked out of the market.

Consumer NZ spokeswoman Gemma Rasmussen said housing was respondents’ biggest concern, even above Covid-19.

“Our runaway housing market has solidified New Zealand as a country divided by property wealth.

“If you don’t have a foot on the property ladder, the dream of owning your own home is becoming increasingly unlikely. At present, the average house price is more than 12 times the average national income.

“We asked New Zealanders what their biggest concerns are at present, and from both a national and financial perspective, the answer was housing.”

Those aged 60-69 were least likely to be able to afford to buy the property (66 per cent), followed by those aged 50-59 and those 70 plus (59 per cent). Approximately half of those aged 18-29 would still be able to afford their property.

The consumer watchdog provided an example of James, a registered electrician from Whanga¯rei who purchased his home for $450,000 in 2018. The property’s capital gains have since outstripped both his and his partner’s combined annual salaries.

“We really lucked out getting into the housing market when we did. Between the two of us we had 30 years of combined KiwiSaver — and some savings on top of that. When we bought the house, it was a massive relief that we wouldn’t be beholden to a landlord. It’s offered us peace of mind. If we’d acted a few years later, our home purchase would not have been possible.”

Renters are often living in mouldy homes, with inadequate heating, and pay about 30 per cent of their income on rent, Rasmussen told RNZ.

“It’s not about how much money you earn, you’re sort of in or you’re out, and if you don’t have family assistance or a really high salary it’s making it really tricky for you.”

On the opposite side, people who own homes are getting richer. The divide exacerbates poverty cycles, Rasmussen said. “I think we’re going to see two New Zealands.”